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Case
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Reference no. 104-082-1
Authors:
Metin Ercan (Bogazici University); T Gucum (Bogazici University); Omer Akkentil (Bogazici University)
Published in:
2004
Length:
18 pages
Data source:
Field research

Abstract

This case outlines the process that eventually led to the bankruptcy of Demirbank, one of the top 10 private banks in Turkey. In December 2000, the State Deposits and Insurance Fund (SDIF), the government agency charged with intervening in bank failure situations, announced that the management and all the rights of Demirbank AS were taken over by the Fund due to the weak financial position of the Bank and its negative impact on the Turkish financial sector. It was a teaching, but dramatic lesson for the bank, which had been the sixth in the sector in asset size in 1998. A famous Turkish industrialist family had spent years developing Demirbank and invested huge amounts of money into restructuring their banks through progress and training. They were very passionate about growing and making their banks one of the biggest 500 banks of the world and becoming the model bank of their country in the international arena. They enlarged their activities outside the borders of the country either through 100% ownerships or through strategic partnerships. However, an inability to implement the fundamental aspects of financial risk management, especially in an economy that was quite vulnerable and trying to recover from crisis, ended their business and the investments they had carried for nearly half a century. The case opens with a detailed exposition of the Turkish banking sector as it came out of the 1990s with hopes of leaving behind its crisis-ridden past. Demirbank''s position within the sector is traced and events leading to its collapse are chronicled. The teaching note was written by Tugba Gucum and Oguz Akandil.

Topics

Finance; Turkey; Bank; Regulation; Risk management; Demirbank; Bankruptcy; International Monetary Fund; CrBB; Asset growth
Location:
Industry:
Size:
Large
Other setting(s):
1998-2000

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